Asian shares mixed, Tokyo falls as BOJ adjusts bond purchase policy

People walk across an intersection near monitors showing Japan’s Nikkei 225 index at a securities firm in Tokyo, Thursday, July 27, 2023.  (AP Photo/Hiro Komae)

BANGKOK  — Asian shares were mixed on Friday after the Bank of Japan adjusted its bond purchase policy but kept its negative benchmark interest rate unchanged.

Tokyo and Sydney slipped while Hong Kong and Shanghai advanced. U.S. futures were lower and oil prices fell.

Japan’s central bank opted to keep its benchmark interest rate at minus 0.1 percent but fine-tuned its bond purchases to allow greater flexibility.

READ: BOJ keeps ultra-low rates, takes steps to make YCC more flexible

The Bank of Japan said that extremely high uncertainties for the economy and prices required a more nimble approach than its previous policy. It said it would offer to buy 10-year Japanese government bonds at 1 percent each business day, instead of the upper limit of 0.5 percent that was imposed under its “yield curve control program.”

The aim is still to keep long-term interest rates near zero percent, it said.

Markets in Japan wobbled before Friday’s announcement. Afterward, Tokyo’s Nikkei 225 fell 2.2 percent to 32,144.47. The dollar weakened against the Japanese yen, slipping to 138.58 yen from 139.49 yen.

Australia’s S&P/ASX 200 declined 0.4 percent to 6,870.58, while in Hong Kong the Hang Seng added 0.9 percent to 19,814.76. The Kospi in Seoul shed 0.4 percent to 2,593.98.

Markets in India and Thailand were closed for holidays.

Stocks climbed in Europe on Thursday after the European Central Bank raised interest rates and left unanswered whether more increases are coming. The French CAC 40 jumped 2.1 percent, and Germany’s DAX returned 1.7 percent.

READ: ECB raises rates to 23-year high; keeps options open for September

But a rally on Wall Street fizzled as the S&P 500 sank 0.6 percent to 4,537.41 after touching its highest level in nearly 16 months during the morning. The Dow Jones Industrial Average also flipped from an early gain to a loss, dropping 0.7 percent to 35,282.72. The Nasdaq composite fell 0.5 percent to end at 14,050.11.

Honeywell International was a heavy weight on the market despite reporting stronger profit for the spring than analysts expected. It dropped 5.7 percent after its revenue fell short of analysts’ expectations, as did its forecast for earnings in the current quarter.

The dip for Wall Street put a halt to a torrid run where the Dow climbed for 13 straight days. It was up as many as 125 points Thursday morning and seemed to be on the verge of tying a win-streak record set in 1897, before it ran out of momentum.

READ: Wall Street’s rally runs out of gas as bond yields jump

Stocks have been roaring on hopes the Federal Reserve can pull off what earlier seemed like a long-shot bet: successfully pull down high inflation by raising interest rates without sending the economy into a painful recession.

But critics have been saying the market’s sharp move upward has been too much, too fast and that the seemingly growing consensus about a “soft landing” for the economy is hardly a certainty.

Reports about the economy on Thursday were mostly encouraging, but could also keep the pressure up on inflation. Strong data on the job market in particular could mean U.S. households will keep spending, encouraging companies to keep raising prices. That in turn could push the Federal Reserve to keep interest rates higher than expected, keeping alive the threat of a recession.

One estimate said growth for the overall economy accelerated in the spring. That easily topped forecasts from economists, who were expecting a slowdown from the first three months of the year. That report also suggested a measure of inflation wasn’t as high from April through June as expected.

Another report said fewer workers applied for jobless benefits last week. It’s the latest indication the job market remains remarkably solid, while a third report said orders for long-lasting manufactured goods strengthened more than expected last month.

The Federal Reserve raised its federal funds rate on Wednesday to its highest level in more than two decades in hopes of dragging inflation lower. High rates work by bluntly slowing the entire economy and hurting prices for stocks and other investments.

READ: Fed raises interest rates, leaves door open to another increase

In other trading Friday, U.S. benchmark crude oil shed 35 cents to $79.73 a barrel in electronic trading on the New York Mercantile Exchange. It rose $1.31 on Thursday to $80.09 per barrel.

Brent crude, the pricing basis for international trading, declined 49 cents to $83.30 per barrel.

The euro slipped to $1.0963 from $1.0965.